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Introduction: Global, national, and local studies revealed that the COVID-19 pandemic has significantly reduced institutional childbirth. However, it is not well understood how the COVID-19 epidemic affected institutional childbirth service utilization. Therefore, this study aimed to evaluate COVID-19 related impediments to institutional childbirth service uptake during the early phase of the COVID-19 pandemic (March 20/2020–June 20/2020) in the rural Arsi zone of Ethiopia. Methods: A community-based Phenomenological study was conducted from January 10–25/2022, among mothers who gave birth in the Arsi zone during the early phase of the COVID-19 epidemic (March 20/2020–June 20/2020) in Ethiopia. Data was collected by the primary author and a university graduated Midwives with experience in qualitative data collection. Eight focus group discussions and six in-depth interviews were conducted among mothers who gave birth in selected rural areas of the Arsi zone during the early phase of the COVID-19 pandemic. Nine key informant interviews were also conducted among Midwives, Maternity Ward Heads, and Community Health Extension Workers. Data was transcribed, translated, and analyzed thematically using Atlas Ti.7 version. Results: Four major themes and eleven sub-themes emerged regarding the barriers to institutional childbirth during the early phase of COVID-19 pandemic. The COVID-19 related fear was a reason for avoiding institutional childbirth for almost all participants. COVID-19 restrictions such as transportation bans, market bans and public transport price doubling were also critical concerns to seeking institutional childbirth. Perceived Poor quality of institutional childbirth care during the curfew was also an impeding factor. Poor communication, incomplete care components and absenteeism were mentioned under this theme. Unbalanced mass media tragedies and rumors of unknown sources were COVID -19 related infodemics found affecting the practice of institutional childbirth. Conclusions: COVID-19 related fears, COVID-19 restrictions, Perceived Poor quality of care during the COVID-19 pandemic and the COVID-19 Infodemic were the main reasons for reduced institutional childbirth service utilization during the early phase of the COVID-19 pandemic in Ethiopia. Therefore, strategies must be designed proactively to maintain essential maternal health services, particularly institutional childbirth, during pandemics like COVID-19 and similar future epidemics.